The technical picture for silver continues to remain extremely bearish following the weak rally of late February, which saw the metal run into resistance in the $16.80 per ounce area, before picking up the downwards momentum once again.The question now is whether the commodity will close the week with another down day, making this five straight days of losses, and perhaps more importantly, if the support platform now being tested in the 16.10 per ounce level will hold firm. What is not in doubt, is that the technical picture for silver is extremely fragile in the longer term, and with a resurgent US dollar and deep congestion now overhead, any recovery for silver in the short term looks unlikely. In addition, there is no evidence of any stopping volume to support the market, and whilst the volumes over the last few days have been declining, this is in line with the price action, which is narrow and confined to a tight range.
With NFP data due later, this could tip silver over the edge and into the next phase of a downwards move, where the next logical support level awaits at $15.60 per ounce, followed by $15.20 per ounce thereafter. However, for longer term traders patience is the key, with a move through $16.00 per ounce then likely to see momentum increase once more.
By Anna Coulling